Yes, interesting times indeed

Yes, interesting times indeed

Besides the earnings releases from Johnson and Johnson (NYSE: JNJ) and Roche today has seen some additional news in this wacky world, which by all indications is getting wackier by the moment.

First comes word from Lilly (NYSE: LLY) who reports earnings next week that they have terminated their relationship with Transition Therapeutics. Yesterday the company announced that they will not advance the diabetes drug candidate TT401 into Phase III testing.  Under the companies’ 2010 collaboration agreement, all development and commercialization rights for TT401, also known as LY2944876, will be transferred to Transition.

Additionally, Lilly’s other partner in diabetes Boehringer Ingelheim reported that sales of Jardiance are exceeding expectations. The company which announced results today noted that Jardiance is beginning to gain market share in the SGLT2 space as the data from the EMPA-REG OUTCOME® study appears to be resonating with payors. As we have noted previously many experts believe that Invokana from JNJ, the current leader in the SGLT2 space and Farxiga from AstraZeneca (NYSE: AZN) will show similar cardiovascular benefits but unlike Jardiance neither drug has hard data to support this belief.

A few thoughts here as it will be interesting to hear what Lilly says about Jardiance when they report earnings a week from today. In previous calls the company noted that while the data was impressive it had yet to translate into share gains. Today’s announcement from BI appears to indicate the tide has turned.

We should also point out the JNJ noted that sales of Invokana grew by 11.7% in the quarter. Which would seem to indicate that the share gains seen by Jardiance are coming at the expense of Farxiga, not Invokana. Should this turn out to be the case it will be another blow to AstraZeneca whose diabetes unit has experienced a series of setbacks.

Looked at collectively what this tells Diabetic Investor is that the diabetes drug space is more competitive than ever. That when it comes to gaining favorable formulary position this is no longer just about price, that to gain an edge the game is now a combination of real data along with competitive pricing. Data which must go beyond showing improvements in glycemic control as measured by HbA1c. The simple fact is thanks to that crusading cardiologist Dr. Steven Nissen, cardiovascular data is now on par with HbA1c data.

This sets up an intriguing scenario as both JNJ and AstraZeneca have yet to complete the cardiovascular studies for their respective SGLT2’s. Again as we have noted in the past thanks to the EMPA-REG data Lilly has set a high bar to hurdle. And while experts do believe all SGLT2’s will show similar cardiovascular benefits without data to support this view Lilly has the upper hand. A hand, that based on today’s news from BI, they appear to be playing very well. Which leads to the most intriguing question of all, will the cardiovascular data for Invokana and Farxiga, no matter what it is, even matter?

Think of it this way, let’s assume for a moment that the data is on par with Jardiance, given the share gains Lilly appears to be making how will JNJ and AstraZeneca fight back? Other than price what weapon would they have in their arsenal to regain lost share? Even worse think about what would happen if the data is not on par with Jardiance, that this is not class effect.

By our way of thinking JNJ and AstraZeneca have a huge hurdle to overcome as they must not only match the Jardiance data but in some way exceed the results seen by Jardiance, otherwise payors have no compelling reason to change anything. In fact, should the data be on par with Jardiance this only would strengthen the payors hand and once again make this a battle over price not performance. No matter what the data Lilly is clearly the winner here as it’s unlikely that these share gains being seen with Jardiance would be reversed. For that to happen the data from JNJ and AstraZeneca would have to be over the top outstanding, which could happen but does not seem likely.

Interesting times indeed!